Bob was granted 10,000 stock by his employer, Benjamin Corporation, in 2012. Each option allowed Bob to purchase one share of Benjamin Corporation stock for $28 per share. On the date the options were granted to Bob in 2012, Benjamin Corporation stock was selling for $26 per share. In 2015m when the Benjamin Corporation stock was selling for $46 per share, Bob exercised his options and purchased 10,000 shares of Benjamin Corporation. In 2017, Bob sold his Benjamin Corporation stock for $42 per share.

Q1: What are the federal tax consequences to Bob and Benjamin Corporation in 2012, 2015, and 2017 if the Benjamin Corporation options granted to Bob were qualified incentive stock options (ISOs)? You may ignore alternative minimum tax (AMT) for this question. Please show your work and calculations.

Q2: What are the federal income consequences to Bob and Benjamin Corporation in 2012, 2015, and 2017 if the Benjamin Corporation options granted to Bob were nonqualified stock options (NQSOs)? You may ignore alternative minimum tax (AMT) for this question. Please show your work and calculations.